The ad, viewable below, was created by German ad agency Thjnk and Radical Media director Sebastian Strasser, according to AdWeek.

The mass of zombie-like creatures chasing the Audi in question are styled much like the undead in Brad Pitt’s World War Z. It isn’t entirely clear what exactly could happen if your Audi “falls into the wrong hands,” as the ad puts it.

Audi is a subsidiary of Volkswagen, which reported a 2.8% boost in sales revenue year-over-year for fiscal 2014.

]]>http://fortune.com/2015/03/02/audi-ad/feed/0Audi's self-driving A7bgfortuneBugatti just destroyed the lives of aspiring rappers everywherehttp://fortune.com/2015/02/23/bugatti-veyron/
http://fortune.com/2015/02/23/bugatti-veyron/#commentsMon, 23 Feb 2015 17:19:08 +0000http://fortune.com/?p=1002231]]>If you were hoping to snag one of the coolest-looking cars ever made, you’re now out of luck. That is, unless, you find one of the 450 Bugatti Veyron owners willing to part with their super-exclusive automobile.

Volkswagen AG just sold the 450th and last of the high-end Bugatti roadsters, according to Bloomberg. The final Veyron, sold last weekend, is an open-top model and is called “La Finale.” It has 1,200 horsepower and will be shown next week at the Geneva Motor Show.

All told, the Veyron sold sat an average cost of 2.3 million euros each ($2.6 million). The final car was sold to a customer in the Middle East, but around half of the Veyrons were sold in Europe, while a quarter went to the United States.

Volkswagen purchased the Bugatti brand, a classic French sports car manufacturer, in 1998. The Super Sport model is considered the fastest street-legal production car in the world, per the Guinness Book of World Records.

]]>http://fortune.com/2015/02/23/bugatti-veyron/feed/0Volkswagen Announces Financial Results For 2013bgfortuneToyota flags its first drop in vehicle sales in at least 15 yearshttp://fortune.com/2015/01/21/toyota-flags-first-sales-drop-in-at-least-15-years-for-2015/
http://fortune.com/2015/01/21/toyota-flags-first-sales-drop-in-at-least-15-years-for-2015/#commentsWed, 21 Jan 2015 12:22:35 +0000http://fortune.com/?p=953334]]>Toyota Motor Corp projected a drop in vehicle sales for the year ahead, its first such bearish forecast in at least 15 years, as flagging demand in Japan, Indonesia and other key markets raises the chance that Volkswagen will steal the industry crown.

The forecast underscores Chief Executive Akio Toyoda’s resolve to steer the company through measured, profitable growth rather than chase volumes after getting burned by a capacity glut in the wake of the 2008 global financial crisis.

Toyota said on Wednesday it expects 2015 global vehicle sales, including those of subsidiaries Daihatsu Motor Co and Hino Motors Ltd, to slip 1% to 10.15 million vehicles.

The world’s biggest automaker has not forecast a drop in annual vehicle sales since at least 2000, a spokeswoman said. That excludes a mid-year revision in 2011, when natural disasters temporarily halted production. Toyota did not provide initial forecasts for 2009 amid uncertainty during the financial crisis.

CEO Toyoda has declared a three-year freeze on building new factories through the financial year to March 2016 to focus on becoming leaner and more profitable, even as Toyota took the top sales spot back from General Motors in 2012.

Toyota expects growth in China, the world’s biggest auto market, to halve this year after sales fell short of its target in 2014 on the back of a slowing economy and political tensions between Beijing and Tokyo.

In contrast, China, the world’s biggest car market, helped rival Volkswagen clock in growth of 4.2% to 10.14 million vehicles last year. The group’s aggressive expansion plans could see it reach a goal of overtaking Toyota this year, ahead of its self-imposed deadline of 2018.

Toyota expects its parent-only sales to rise 0.4 percent to 9.18 million vehicles, with a 7% fall to 1.45 million in Japan, where a sales tax hike last year has hit demand. It expects overseas sales to rise 2% to 7.73 million vehicles, thanks to a healthy U.S. market.

In 2014, group-wide sales grew 3% to 10.231 million vehicles.

Toyota’s sales in Indonesia, Southeast Asia’s biggest economy, fell 11% last year. The Indonesian automobile market is expected to remain weak in 2015 after the reduction of fuel subsidies.

Toyota forecast its sales in Thailand will rise 0.9% to 330,000 vehicles in 2015 led by an increase in commercial vehicle sales. Its Thai auto sales shrank 27% in 2014 as domestic political unrest impacted consumer buying decisions.

]]>http://fortune.com/2015/01/21/toyota-flags-first-sales-drop-in-at-least-15-years-for-2015/feed/0Views From The Seoul Motor Showbgfortune17 auto predictions for 2015, fearless and fecklesshttp://fortune.com/2014/12/30/auto-predictions-for-2015/
http://fortune.com/2014/12/30/auto-predictions-for-2015/#commentsTue, 30 Dec 2014 12:00:22 +0000http://fortune.com/?p=923685]]>Despite car and truck sales that motored past 16 million for the first time since 2007, recalls dominated the news for most of the year. General Motors GM held center stage, dealing with cascading revelations about faulty ignition switches and recalling millions of vehicles. While GM opted for something approaching full disclosure of its missteps , publishing an report into company-wide fumbles, Japanese airbag maker Tanaka chose to stonewall. It left any remedies up to its beleaguered customers, notably Honda and Toyota. They are the ones who deal with the fallout of exploding safety devices that fatally fired shrapnel throughout the passenger compartment.

On the sales front, General Motors and Ford F lost market share to Chrysler, which leveraged its Jeep brand to previously unimagined heights - and then, metaphorically left its heritage behind when it established legal domicile in the Netherlands and changed its name to FCA US LLC.

Among the year's biggest surprises was the plunge in gasoline pries. Economists differed on the economic impact--money in the pockets of consumers offset by declines in exploration and drilling activity--but everyone agreed that it was bearish for small cars and hybrids. The combination of cheap gas and a steep sticker price made the Cadillac ELR the runaway winner of the most disliked car of the year award. Only 155 of the Volt-based $80,000 cars found buyers in November.

Detroit Three: The other two Michigan-based manufacturers still face bumps. General Motors copes with continued fallout from its ignition switch recall while Ford fights through the most aggressive launch period in the company's history.

Japanese Three: Honda treads water while it waits for bold new designs from its Americanized management team to reach market, particularly the Acura NSX super car, which has been on the auto show circuit now for several years. Focused now on his legacy, CEO Carlos Ghosn drives executives even harder to meet targets in his latest three-year plan while he grooms a successor. As for Toyota, Automotive News declares that it is firing on "all cylinders" before its move from Southern California with fresh products in key segments.

German Three: Mercedes-Benz begins to sag as new lower-priced Benz's inevitably erode its once invincible "the best or nothing" status. At BMW, imminent arrival of a new 7-series cements its status as the preferred brand of Scarsdale, Shaker Heights, and Santa Monica. A new A3, starting at $30, 795, should nicely lift Audi's sales beyond 2014's 15% climb, and a new Q7 SUV should nicely lift profits.

Chinese manufacturers: Coming to the U.S.? Warren Buffett's BYD says it is arriving in 2015 and Geely in 2016 but we've been hearing that someone was coming since at 2006. The refinement of Chinese cars is the issue. With more than 80 local automakers producing 524 different models in China, R&D money is spread too thinly to produce meaningful results.

Tesla: In an effort to blunt criticism about slow refueling times for battery-powered cars, Tesla TSLA starts to roll out of a network of battery-swap stations. CEO Elon Musk must hope he can outdo Shai Agassi's Better Place, which tried to build a whole company around battery-swaps before going bankrupt in 2013.

Headquarter shifts: With Toyota leaving for Texas and Mercedes headed toward North Carolina or Georgia from New Jersey, look for Subaru to chart its own path when it builds its new headquarters. One option: Moving closer to its customers by relocating in Vermont.

CEOs: Newbies Mary Barra at GM and Mark Fields at Ford start playing close attention to the moves made by FCA's Sergio Marchionne. Despite running his growing empire on two continents, Marchionne tacked on a U.S market share gain of 1.2 points, unhindered by one of the weakest product lineups in the business and troubles with his much heralded eight-speed transmission.

Awards: Despite early wins for VW's Golf GTI, the Detroit-centric jurors of the North American Car and Truck award 2015 prizes to Ford's Mustang as well as Ford's F-150 pickup truck.

Truck wars: Awards aside, Ford's aluminum pickup is hard to build and slow to sell, leaving an opening for Ram's fast-rising 1500 while Nissan tries to forget the failure of its first full-size truck when it launches the second-generation Titan with the biggest of big rig styling. The industry's biggest secret is revealed by veteran executive John Krafcik in Automotive News: In the over $50,000 category, pickups and SUVs distributed through non-premium dealers outsell German luxury brands.

Brands with the most to make up for in 2015: Volkswagen, whose stale product line depressed sales by 11%, thereby delaying Ferdinand Piech's plans for global supremacy, and Volvo, down 17%, which has yet to make any progress under its Chinese owner.

Brands with the most incentive to coast in 2015: Jeep, which must be exhausted after lifting sales an astonishing 44% on the back of the new Cherokee, and Subaru, now the 10th most popular brand in America after improving its sales by 21% in its usual fashion: quietly.

Alternative fuels: For the first time since diesel-powered cars from Europe started arriving here in the 1950s, old first-person accounts about the joys of driving a diesel fall off to near zero. They are replaced by new first-person accounts about the joys of driving cars with ridiculously high horsepower like the 580-hp Chevrolet Camaro ZL1 and Dodge's Challenger SRT Hellfire with 707 hp. Elsewhere: fuel-cell cars with their longer cruising range move center-stage, stealing the limelight from battery-powered cars.

Technology: Cadillac will introduce high-resolution video streaming in the rearview mirror, which improves the field of vision by about four times greater than a traditional mirror by removing obstructions like pillars and passengers. Just the thing for aging Cadillac drivers with stiff necks. Coming next: a "beep, beep, beep" signal like that used by garbage trucks whenever the car is driven in reverse.

Autonomous cars: Researchers are working on devices that will automatically park your car in a parking lot without you being in, or near, the car. It will also slip a note under the wipers of the car next to it with your phone number and insurance carrier in case of any scratches.

Dealers: Car dealers work toward reducing the paperwork involved in buying a car and the hours it takes to fill it out. That will give them more time to devote to upselling add-ons such as extended warranties, paint and fabric protection, and rust-proofing.

Classic cars: Prices plummet as an enormous supply of post-war classics, hidden away on an off-shore island, becomes available for the first time in 50 years. Collectors are especially eager to find Packards, Studebakers, Hudsons, Nashes, Kaisers, and Henry J's. More's the surprise because all of the cars are in running condition and are used as daily drivers.

BWM Group announced a new leader Tuesday, with company insider Harald Krueger taking over for outgoing Board of Management chair Norbert Reithofer. Reithofer had been the chief executive at the German automaker since 2006.

This wasn’t the only change at the top for BMW today. Senior executive Herbert Diess was hired away by German rival Volkswagen, perhaps signaling that Diess had been passed over for the top job at BMW. Diess will lead the Volkswagen passenger cars brand at VW.

Krueger has been at BMW since 1993, most recently serving as the head of production. Reithofer joined BMW in 1987 and was also responsible for leading production before becoming CEO.

These changes are happening a year earlier than expected, although BMW has given no reason as to why.

Reithofer isn’t entirely done at BMW, though, as he will take over as Chairman of the Supervisory Board.

]]>http://fortune.com/2014/12/09/bmw-shakes-up-its-leadership-ranks/feed/0worlds-most-admired_bmwbgfortuneThe 10 biggest R&D spenders worldwidehttp://fortune.com/2014/11/17/top-10-research-development/
http://fortune.com/2014/11/17/top-10-research-development/#commentsMon, 17 Nov 2014 21:40:00 +0000http://fortune.com/?p=870289]]>"Innovative" has become, it seems, a trite descriptor, since marketing departments plaster the word everywhere. So who is actually investing the most in research and development? As it turns out, companies are spending more on R&D than ever before. The Global Innovation 1000, a list of public companies that spend the most on innovation, last year invested a record $647 billion, an increase of $9 billion over the previous year. That total represents two-fifths of all innovation spending by organizations worldwide, according to a report from Strategy&, the consultancy formerly known as Booz & Co.

Where does all that money go? Over the past decade, two industries have accounted for half of all R&D spending: healthcare and computers. Other resource-intensive industries include healthcare, autos, and software. Fortune combed through the annual reports of Strategy&’s top 10 to learn more about how big companies spend their R&D budgets. Here’s what we found.

]]>http://fortune.com/2014/11/17/top-10-research-development/feed/0LISTICLE.R&D.11.14.Volkswagen.01michaelcasey2014The world’s 10 largest employershttp://fortune.com/2014/11/12/worlds-largest-employers/
http://fortune.com/2014/11/12/worlds-largest-employers/#commentsWed, 12 Nov 2014 12:00:27 +0000http://fortune.com/?p=857591]]>Global organizations have left the recession behind as they focus on positioning themselves aggressively for growth--and building a workforce big enough to sustain their business while staving off the competition is integral to future success.

Fortune has compiled its first-ever list of the world's 10 biggest employers among publicly listed companies, based on latest fiscal-year-end figures from FactSet Research Systems, annual reports, and other publicly available information. In the cases where companies provide a specific breakdown of part-time and full-time employee figures, we count part-time employees as half of a "full-time equivalent" worker. If companies do not provide a breakdown, all employees are considered full-time.

On our list, size matters: Of the top 10 employers, six had revenues above $100 billion in their most recent fiscal year. These global giants hail from a variety of industries including retail, business services, energy, and banking, some of which are more labor-intensive than others, thus dictating a need for more employees. The companies are based throughout the world, representing six countries; China is the home base for three of them, followed by the U.S. and the U.K., each with two on the list. We included efficiency data for these companies, measured by revenue per employee based on 2013 annual figures. A few of these firms may surprise you, while others are well known for their size and reach.

]]>http://fortune.com/2014/11/12/worlds-largest-employers/feed/0Volkswagen AG "Kombi" Microbus 2013scottdecarlo2014Chinese firms ramp up R & D spending as they catch up with the Westhttp://fortune.com/2014/10/27/chinese-firms-ramp-up-rd/
http://fortune.com/2014/10/27/chinese-firms-ramp-up-rd/#commentsMon, 27 Oct 2014 20:01:23 +0000http://fortune.com/?p=838063]]>Chinese companies are significantly ramping up their spending on research and development, according to a new report.

Companies based on the mainland of China have increased their spending by a factor of 15 over the past decade, according to a report from the management consulting firm “Strategy&,” and the number of Chinese firms on Strategy&’s 2014 Global Innovation 1000 has gone from eight in 2005 to 114 today.

The reason for the R&D growth: Chinese companies are shifting away from producing cheap goods for export and concentrating on higher quality economic growth.

"When we are looking at the regional cut, China continues to go gangbusters," said Barry Jaruzelski, the report's author and a senior partner with the firm.

"It's been in the high double-digits for many, many years," he added. "The rest of the world was double-digit, but lower -- around 13 percent -- and North America and Europe were positive, but much lower, at 3. 5 percent in North America and 2.5 percent in Europe."

The findings dovetail with overall research and development trends in China, including government spending, which the National Science Foundation found, is second only behind the United States.

Patents, too, increasingly have a Chinese flavor, with the largest number of applicants coming from China and Chinese residents. The Chinese overtook the United States in 2012, according to the World Intellectual Property Organization.

"In terms of their development, they have advanced a lot over the past 20 years," said Mosahid Khan, head of the intellectual property and statistics section at WIPO in Geneva. "They are sort of catching up with the United States and Japan on the technological frontier whether it be patents or R & D investment."

Chinese companies are still are dwarfed by American-based firms when it comes to the $647 billion spent on global research and development. The Americans, as they have traditionally done, are the biggest spenders at $256.9 billion followed by European-based companies at $193.8 billion and then Japan which is third at $116.7 billion.

Still, the Chinese growth can't be ignored. It has gone from almost negligible number in 2005 to $30 billion in 2014. Chinese firms increased their spending from a year ago by 46 percent.

Robert Atkinson, the president of The Information Technology and Innovation Foundation, a Washington, D.C., technology policy think tank, warned that some of the Chinese figures may be "somewhat overstated" due to a "rewards system" for state-owned enterprises which is based on them doing "a lot of R & D" and thus classifying some things as research and development which wouldn't be treated as such in the United States.

Still, he said, China was "pulling out all the stops" in R&D as part of a strategy to become more self-sufficient by producing as much as they can indigenously and ending their dependence on foreign firms like Apple or Boeing for help.

"They have basically decided the old strategy of attracting foreign firms to set up assembly operations is no longer their path to growth," Atkinson said.

"They feel like they have maximized that potential," he said. "This is one reason why you are seeing now a real backlash against foreign technology firms in China going after companies like Microsoft, Qualcomm and other with whole set of trumped up anti-monopoly complaints and things like that. They feel like they don’t need them anymore."

And while China is spending more, the United States has been cutting its government R & D spending which could be one reason why the Chinese could one day surpass the Americans. The 2014 Global R&D Funding Forecast, published by Battelle/R&D Magazine, projects China could overtake the United States as early as 2025.

Atkinson said the goal of China is "beat us" and that America must do more including more generous tax incentives for R&D and reversing cuts in science and technology if it wants to remain the world's innovation leader.

"We've got to go back and just bite the bullet and you know what we are going to do that because we are not going to lose," he said. "If we did those things, I have every faith we could stay ahead of China from an innovation perspective. If we don’t do those things, within 10 years or 15 years China will have caught up to us in many, many areas or surpassed us."

The report, which uses data from Bloomberg and Capital IQ data combined with surveys and interviews, looks both at a company's R&D spending and its level of innovation. Along with charting global trends, the report also highlighted the sectors and companies that are doing the most in research and development.

One promising indicator for the United States is there wasn't one Chinese firm either in the overall spenders or innovator top 10 -- a sign that no Chinese firm is about to match the exploits of a Google or Johnson & Johnson in the near term. In fact, the highest ranking Chinese company was ranked 62nd.

Volkswagen VOW3 and Samsung SMSN, for a second year running, topped the list of companies spending the most on research and development at $13.5 billion and $13.4 billion respectively. Intel INTC and Microsoft MSFT increased their spending to move up to third and fourth on the list while Google for the first time joined the 10 just ahead of Merck and Co. MRK. Along with Merck, there were three other health care companies on the top 10 list of spenders for 2014.

“Our industry’s pace of change is so fast that we need to continuously plan to replace our own technologies,” Intel spokesperson Christine Dotts said, singling out the company’s 14 nanometer processors as example of that. “We can’t sit back and do little because the expectations of Moore’s Law demand constant innovation.

Despite GM's ongoing woes, almost nobody has an unkind word for CEO Mary Barra, including TIME and Fortune. Even Barra's 2025 strategy for consolidating platforms, a goal GM GM has sought since the 1980s, has gotten favorable notice. Let's see what happens when the new wears off. As Barra undoubtedly knows, strategy talk is cheap at GM; it is the execution that counts.

Loser

A German court revived criminal charges against former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter involving a failed 2008 takeover of Volkswagen AG. Wiedeking was hailed as a genius after Porsche's turnaround in the 1990s. But the court said Porsche's board may have approved the deal seven months before the company announced its intentions, making the two men guilty of market manipulation under German law.

Executives

Winners

Before he left Audi of America in 2012, Johan de Nysschen made many of the decisions on marketing, distribution, and product content that have made Audi one of the hottest luxury brands. Of course, today's management is taking the bows, but autos are a long lead-time business, and it was de Nysschen who laid the groundwork for 2014's success.

Losers

Now at Cadillac GM, which he joined in July, de Nysschen has been assailed by traditionalists for his decision to change the brand's alpha-numeric naming structure and to move its global headquarters from Detroit to New York City. Clearly peeved, de Nysschen went on Facebook to strike back at every "armchair marketing expert" and blasted GM retirees who called the New York move "the dumbest idea since the Cimarron. " DeNysschen wondered sarcastically whether any of them "had a hand in creating that masterful monument to product substance."

Investors

Winner

Despite a big hit in September when Ford F warned that operating profits would come in $1 billion less than forecast, its shares are down only 5.9% this year. It might be doing even better were it not for investor worries about losses in Europe and South America as well as customer reception for the new aluminum pickup truck.

Loser

GM shares have yet to recover from the recall crisis earlier this year and have lost nearly a fifth of their value since January 1. "General Motors looks like it is struggling to get its act together," wrote one commentator on Seeking Alpha. "We continue to want nothing to do with the company."

Brands

Winners

Jeep added 1.2 points of share this year thanks to the incremental lift from the new Cherokee and it will get another boost in 2015 from the Fiat-based Renegade.

Losers

Ford division lost .9 points while it waits for sales from new pickup truck and sporty car models to kick in.

Segments

Winners

Stable and falling gas prices have stripped the pretense from American buying habits: Given a choice, they prefer trucks. In September, sales of the Chevrolet Silverado pickup rose 54% and the Dodge Ram 30%. Overall, for the first nine months of 2015, truck sales climbed 10%.

Losers

In an overall industry up 6% in 2014, car sales rose only 1%, according to Automotive News. Some segments actually lost ground. In the absence of noteworthy new models, full-size cars like the Toyota Avalon TM were down 6%.

Plants

Winner

Ford will hire more than 1,000 people for its Oakville, Canada assembly plant in preparation for the launch of its 2015 Edge crossover. The hiring is something of a mixed economic blessing: Ford is getting $140 million in government subsidies, and about half of the new jobs will come at the expense of outside suppliers who had previously performed them

Loser

FCA CEO Sergio Marchionne cast doubt on the future of Chrysler's historic Toledo plant, where Jeeps have been built since 1941. Marchionne said the body-on-frame plant would require an expensive overhaul that would make it uneconomic to build the 2017 Wrangler with its unibody construction.

Dealers

Winners

All those investors in AutoNation, Penske Automotive, Group 1 and other publicly owned dealer groups who saw their holdings take a nice upward bounce after Warren Buffett disclosed he had purchased the Van Tuyl Group, the fifth-largest U.S. auto retailer. The speed-up of consolidation following Buffett's deal should make help stockholders lock in those gains.

Losers

All those remaining mom-and-pop dealers who will be going up against yet another smart operator in Buffett with scale efficiencies and greater access to capital. Small stores will find it hard to compete against the giants' automated processes, standardized business practices, and national brands armed mostly with superior knowledge of the local market.

Year-end awards

Winners

Ford, General Motors, Toyota, and Volkswagen Group each placed three entries on the short list for North American Car and Truck of the year honors. The awards, voted by a jury of 50 automotive journalists (of which I was a charter member), have gained in importance in recent years and are fiercely contested.

Losers

GM, Toyota, VW, and every other automaker on the short list, none of whom stands a chance this year against Ford. Its entries are Mustang and F-150, both of which have been redesigned for 2015 and are adored by the motoring press. You could skip the voting and engrave the winners' trophies today with the names of these two hometown favorites.

Historic echoes

Winner

Detlev von Platen, CEO of Porsche Cars North America, was channeling former GM CEO Roger Smith at the Paris auto show recently. When asked whether Porsche would develop a more affordable entry-level car, von Platen replied, “Our entry model is our pre-owned program.” His comment recalled Smith's memorable advice to American consumers in 1988 when asked how they should react to low-priced Japanese imports. Said Smith: They should "buy a used Buick" ”

Loser

Was Mary Barra channeling former boss, GM CEO Jack Smith, when she announced a global profit goal of 9-10% percent early next decade in her 2025 strategy announcement? Back in the early 1990s, Smith set a five percent profit margin goal and maintained it until his term ended in 2000. Note to Barra: GM never came close to reaching the target, and Smith's successor quietly dropped it.

The penalties raised the possibility of similar fines being levied against other global players such as Daimler’s Mercedes-Benz and Tata Motor Ltd’s Jaguar Land Rover, which are being probed for possible anti-competitive behaviour.

The price regulator in Hubei province said it would fine the sales unit of Volkswagen’s joint venture FAW-Volkswagen Automobile Co Ltd 249 million yuan ($40.6 mln) for fixing Audi prices.

Chrysler’s China sales unit will be fined 32 million yuan for operating a price monopoly, anti-trust regulator the National Development and Reform Commission (NDRC) NDRC Shanghai branch said. Separately, three Chrysler dealers in Shanghai and eight Audi dealers in Hubei would also be fined.

While many industries in China have come under the spotlight as the authorities intensify efforts to bring companies into compliance with an anti-monopoly law enacted in 2008, the auto sector has been under particular scrutiny amid accusations by state media that global car makers are overcharging consumers.

The penalty is severe, and companies can be fined up to 10 percent of their annual China revenues for breaking the anti-monopoly law. But the FAW-Volkswagen penalty represents just 6 percent of Audi’s turnover in Hubei, according to a person with knowledge of matter.

Last month, China, the world’s largest car market, fined 12 Japanese auto parts makers a record 1.235 billion yuan for manipulating prices.

CONCERN

The anti-trust investigations are causing concern and in August the European Union Chamber of Commerce in China said Beijing was using strong-arm tactics and appeared to be unfairly targeting foreign firms.

Foreign automakers are obliged to form joint ventures in China. Volkswagen has a 30 percent stake in FAW-Volkswagen, Volkswagen’s premium auto brand Audi has 10 percent and Chinese state-owned group FAW owns the rest.

Punishment for Chrysler and Audi has been widely expected as the NDRC previously said it had concluded the two carmakers had broken the anti-monopoly law.

Audi had already said its sales arm had violated “part” of the country’s anti-monopoly laws.

“We have been optimising the management processes in the sales and dealership structure,” Audi China said in a statement on Thursday.

“Audi and FAW-Volkswagen attach great importance that all applicable antitrust and competition laws are adhered to.”

]]>http://fortune.com/2014/09/11/china-antitrust-regulator-fines-volkswagen-chrysler/feed/0CHINA-GERMANY-AUTO-FAW-VOLKSWAGENsolster2Denials of VW-Fiat Chrysler merger, but the sense is no secrethttp://fortune.com/2014/07/18/fiat-chrysler-vw-merger-denials-logic/
http://fortune.com/2014/07/18/fiat-chrysler-vw-merger-denials-logic/#commentsFri, 18 Jul 2014 18:46:08 +0000http://fortune.com/?p=749744]]>Curt denials by Fiat Chrysler and Volkswagen that they're talking merger belie the forces pushing the two automotive companies toward each other. Are the forces strong enough to overcome some resistance to a combination?

VW is stumbling in the U.S.; acquiring Fiat Chrysler would immediately boost VW's share of the U.S. vehicle market to 15 percent from the current 4 percent. Fiat Chrysler owns the Alfa Romeo luxury brand, which VW has openly admitted coveting. VW would gain the Ram pickup brand and Jeep, helping the German company towards its goal of world domination by 2018.

For Fiat Chrysler and its controlling Agnelli family, the advantage of selling to VW would be simple and straightforward: a big pile of money. The stock market values the company, according to its current capitalization, at about $12 billion. At least one analyst theorizes a buyout might cost VW $40 billion, including the assumption of Fiat's debt.

"We believe a deal has a degree of industrial logic--and, perhaps more importantly, a load of emotional logic," Bernstein Research analysts wrote in a report published on Thursday.

Manager Magazin, a German publication, said this week that Ferdinand Piech, the chairman of Volkswagen and a member of the company's controlling shareholder, the Porsche family, had been in takeover discussion with Agnelli family, the controlling shareholders of Fiat. All involved denied the story's accuracy--though in the early stages of big industrial mergers, the truth can sometimes be bent or stretched.

For some years, European bankers have concluded that the Agnellis are poised to exit the mass-market automobile business eventually, while hanging on to Ferrari and its F-1 racing team. A recapitalization that separated the Fiat auto company from other Fiat industrial properties set the stage for the merger with bankrupt Chrysler in 2009.

Fiat Chrysler, while not in immediate financial distress, isn't particularly profitable and must raise substantial capital to fulfill its own ambitious growth plans. Later this year, a public share offering of newly-consolidated Fiat Chrysler Automobiles N.V. is expected to take place. That share offering could be a signal of support--or lack of it--from capital markets for FCA's growth prospects.

Beyond the question of what advantage VW sees in owning FCA is one of whether it's actually a good idea. According to Bernstein Research's calculations, the cost of acquiring FCA would be dilutive to VW shareholders in the short term. That may not bother Piech so much, who at age 77 appears active if not spry. But he may be more eager than his fellow shareholders.

The Chrysler part of FCA has been down this road before with another German acquirer, Daimler AG. Daimler bought Chrysler in 1998 and then sold it to Cerberus Capital Management in 2007 after failing to realize its strategic vision. VW shareholders could be forgiven for deciding that they have seen this movie before want no part of FCA.

Until it becomes clear whether Piech is determined to proceed, and how quickly, VW still has plenty of work to do improving the brand's North American presence. The FCA stock offering later this year could be a hint of things to come.

]]>http://fortune.com/2014/07/18/fiat-chrysler-vw-merger-denials-logic/feed/0Chrysler CEO Sergio Marchionne Speaks At The Brookings InstitutionsoccerrogueVolkswagen expands Chattanooga plant, will add 2,000 jobshttp://fortune.com/2014/07/14/volkswagen-chattanooga-suv/
http://fortune.com/2014/07/14/volkswagen-chattanooga-suv/#commentsMon, 14 Jul 2014 21:34:48 +0000http://fortune.com/?p=745171]]>Volkswagen AG, which been has stumbling lately in the United States, ended months of speculation by announcing it will expand a factory in Chattanooga, Tenn., and begin building a new crossover model there in 2016.

VW had been considering whether to build the new vehicle - so far unnamed - in Chattanooga or at its other North American factory in Puebla, Mexico. The carmaker delayed the crossover, known sometimes as an SUV, for reasons that haven't been disclosed publicly, and much to the chagrin of its U.S. dealers. Dealers invested heavily in showrooms, expecting more sales than have materialized.

In the meantime, VW's Chattanooga plant has been embroiled in controversy over an attempt by the United Auto Workers union to organize, a bid that was voted down narrowly by workers.

“The United States of America remains an important market for Volkswagen,” said Martin Winterkorn, VW chief executive officer, in Wolfsburg. “We are now taking the next step. Volkswagen is expanding its commitment to the United States. A key role here will be played by Volkswagen’s midsize SUV. It will be built by real Americans starting at the end of 2016.”

As part of VW's stated goal of becoming the No. 1 automaker in the world by 2018, Winterkorn said the automaker intends to sell "about 800,000 vehicles" annually in the U.S. by then. Last year VW sold about 400,000 vehicles in the U.S.; sales are down this year more than 13%. A bright spot, in the U.S. and worldwide, has been VW's Audi luxury franchise.

VW has been earning massive profit and enjoys a solid balance sheet. Analysts worry that weakness in the U.S. and in India partly reflect troubling defects in management. They point out that Ferdinand Piech, the octogenarian chairman of the company, has ruled the automaker by force of his will rather than by building a sustainable cadre of decision makers.

The German automaker said it will spend $900 million on the new crossover, a replacement for its Tiguan. That amount will include $600 million on the plant and a research and development center on the same site. About 2,000 workers will be hired at the plant, about 200 for R&D.

The future of VW's relations with the UAW remain murky, leading to uncertainty about whether workers in Tennessee ultimately might be represented by the union. Following the ballot defeat earliest this year, the UAW last week announced it intended to inaugurate a local in Chattanooga, without power or authority, whose membership of VW workers would be voluntary. Presumably the union intends to build its credibility in advance of another vote or of a decision by VW to recognize the union unilaterally as bargaining agent for the work force.

Many of the state's politicians have preached opposition to the UAW, hinting that state aid for future plant expansions could be imperiled.

VW has ambitious targets for growth. But the automaker faces a rocky road convincing U.S. dealers that this time, after some false starts, it has a viable plan for expanding its footprint. A familiar clich? of the automobile business is that popular new vehicle models can overcome other difficulties. That hasn't been the case for VW, at least so far.

]]>http://fortune.com/2014/07/14/volkswagen-chattanooga-suv/feed/0VW Automobile AssemblyfortuneheatherAuto winners and losershttp://fortune.com/2014/07/11/auto-winners-and-losers/
http://fortune.com/2014/07/11/auto-winners-and-losers/#commentsFri, 11 Jul 2014 14:43:25 +0000http://fortune.com/?p=743632]]>The first half of 2014 has unfolded in unpredictable ways: House majority leader Eric Cantor lost a primary election, the U.S. soccer team made it to the Round of 16 in the World Cup, and "Game of Thrones" was actually bloodier than the year before.

And so it went in auto sales: Many results were unexpected. In an overall economic environment that was surprisingly positive, some segments, brands, and manufacturers glistened while others faltered. Despite being battered by an epidemic of recalls, General Motors GM posted better sales than expected, while Ford F, celebrating the elevation of its new young CEO, fared worse. Sales of most luxury cars accelerated but Cadillac, a brand still in recovery, fell back. Subaru shined while Mini moped.

After looking over the numbers and reading the post-game analyses, here are some contradictions, mysteries, and surprises that confronted industry observers from January to June.

Sales: With sales running at an annual rate above 16 million cars and trucks and headed toward their best finish since 2006, optimism is the prevailing emotion. Automotive News quoted one securities analyst musing that sales might reach 18 million by 2017. Others believe that sales have peaked for this cycle and need to take a breather before heading higher. They pointed in particular at the growing popularity of six, seven, and even eight-year loans that could leave customers owing money when they go to trade in their old car for a new one.

Recalls: GM sold 267,461 cars and trucks in June, far exceeding expectations and temporarily silencing its critics. It seems that the cascade of recent announcements from GM and other manufacturers has created "recall fatigue" among new car buyers. Besides, most of the recalled cars are older models that don't show up in new car sales.

Hybrids: The number of hybrid models has increased every year, from 2009 through this year--it now totals 47--but their market share has not kept pace, according to Tom Libby, veteran IHS Automotive analyst. Hybrid share in the first six months actually declined from last year, despite an increase in model count. Libby doesn't say, but my guess is that the number of buyers willing to pay a premium for gas savings is shallower than expected and it will take another leap in gas prices to jump-start sales. Consumers may also be wary of hybrid mileage claims. Both Hyundai and Ford admit to publishing overly optimistic mileage claims for their hybrid models.

Trucks: Pickup truck sales are well off the pace of their peak year in 2005, says independent analyst Warren Browne, and he doesn't see them climbing up to their former levels for another three or four years. "Unfortunately, we are not close to past peak economic realities, when real GDP growth averaged more than 3%, housing starts were above 1.7 million units and monthly paystubs allowed large-pickup intenders to become consumers," says Browne. "We are going to have to wait until the next sales cycle, probably 2017-2018, to surpass the 2005 sales peak." That's bad news for the Detroit Three, for whom pickup trucks are an outsize source of profits.

Segments: Compact crossovers climbed another 13% to 1.1 million by Automotive News' calculation (think Honda CR-V,) while midsize sedans shrank 3% to 1.3 million (think Toyota Camry). How long before these lines cross and baby SUVs become the most popular body style?

Sports cars: Subaru is the king of all-wheel drive vehicles and wields a big stick in rallying, but has a hard time selling sports cars. It moved 4298 copies of its BRZ, jointly developed with Toyota, while Scion's version of the same car, called the FR-S, found 7662 buyers in the same period.

Brands: Fiat Chrysler's Jeep saw its sales jump an almost unbelievable 45%, on the strength of the compact Cherokee introduced last year. Jeep sold 103,397 more vehicles than in 2013, 80,432 of them Cherokees. New models weren't enough to lift FCA's Chrysler, however. Its sales fell 14% despite the arrival of a new 200. Chrysler has been designated FCA's volume brand, but it is currently being outsold by BMW, Mercedes-Benz, and Mazda.

Import brands: Kia, the newest full-line manufacturer in the U.S. car scene, proved again that it is a fast learner. Its first-half sales ran 7.9% ahead of a year ago--nearly twice the industry average--and they weren't all Souls and Rios. As Edmunds.com analyst Jessica Caldwell points out, Kia's top of the line model K900, sells for more than double the $26,000 of its range topper from a decade ago, the Amanti. I drove a $66,400 K900 last week, powered by a big 5.0 liter V-8 and loaded with advanced electronics. Except for the badge on the hood, it was indistinguishable from cars selling for $20,000 or more.

Volkswagen, which can do little wrong in Europe, showed once again that it is a slow learner when it crosses the Atlantic. Still unused to the idea that Americans like change, it has been marketing the same lineup of cars now for several years, and has seen sales fall 7% since the beginning of the year. It has vowed to speed up, but progress is slow. The seventh generation Golf coming to the U.S this fall made its debut two years ago in Europe.

Overseas markets: China continues to sizzle while Brazil cools off. Slow economic growth and higher interest rates along with, no doubt, football fever - soccer to you - kept Brazilians out of new car showrooms. Its motor vehicle sales fell 10% in June, finishing off a worse-than-expected first half in which sales fell 7.1%. That's bad news for GM and VW, which both have big operations there. In China, the world's largest car market, passenger vehicle sales are up 11.2 percent to 9.63 million for the first six months, though sales cooled in June. Domestic brands continue to lose ground to Western makers and now account for only a little more than one-third of the market. That's good news for GM and VW, the two largest sellers there.

Ultra-luxury: Rolls-Royce sales boil around the world but are only lukewarm in the U.S. Rolls, which is owned by BMW, says customers in Europe and Asia boosted sales 33% in the first half to 1968. That's in sharp contrast to the skinny increase in the U.S., where One Percenters bought only 450 Phantom, Ghosts, and Wraiths vs. 426 last year. The average Phantom owner has a net worth of $30 million, which is a good thing since the Phantom stickers for $407,500 and can be optioned up to $500,000.

]]>http://fortune.com/2014/07/11/auto-winners-and-losers/feed/0new cars in dealership lotfortuneheatherCan Volkswagen turn it around in the U.S.?http://fortune.com/2014/07/03/vw-us-sales/
http://fortune.com/2014/07/03/vw-us-sales/#commentsThu, 03 Jul 2014 09:00:14 +0000http://fortune.com/?p=737930]]>The U.S. automotive market is on a tear in 2014, with first-half sales up 4.3% in unit terms and the seasonally adjusted pace for June better than at any time since 2006. A notable exception has been the sales of Volkswagen, down 22% for the month and 13.4% for the year.

VW's anemic sales performance in the midst of a climbing U.S. market should be doubly troubling to the brain trust at headquarters in Wolfsburg, Germany. VW executives have asserted that a strong U.S. presence is key to its goal of attaining No. 1 status in the world by 2018.

While the VW brand is leading Europe and surging in China, it's actually going backward in the U.S., having been surpassed by newer entrants to the market, notably South Korea's Hyundai and Kia. The immediate reason is that VW's car models, while attractive to a small base of fans, are mostly at odds with the preferences of American consumers in size, price and utility.

"Volkswagen has been and continues to be in a new product drought. It simply doesn’t have the vehicles or the breadth of product portfolio to capitalize," said Michelle Krebs, senior analyst for AutoTrader.com. VW, for example,"is missing out on the fastest growing segment in the market, the compact utility. It has the Tiguan but it can’t compete with the likes of Ford Escape, Honda CRV and RAV 4."

While the price of the Tiguan is roughly comparable to a Toyota RAV4 or Honda CRV, its operating costs are about 20% higher per mile, according to Edmunds.com, partly due to worse fuel economy.

The automaker's Chattanooga, Tennessee plant--opened in April 2011--has been manufacturing a Passat family sedan that is much more competitive with the top performers in its class than a previous European-built Passat. Oddly, VW so far has failed to follow up Passat with a similar-sized crossover, the introduction of which dealers have been urging.

VW dealers in the U.S. are disappointed, having invested heavily in their stores for the past few years with the understanding that the German automaker intended to boost its offerings and modify them to be pleasing to a broader U.S. consumer audience.

Incredibly, the original Beetle was the last VW model to capture American mass-market interest. The Rabbit was actually a Dog, plagued by defects and poor quality. Earlier VW managements weren't committed to learning the American idiom, choosing rather to find consumers who favored the VW style that appealed to Europeans.

VW's luxury franchise, Audi, nearly closed its doors in the early 1990s before bouncing back to become on of the U.S.'s coolest brands, a rival to BMW and Lexus.

"It will be a couple more years before VW's entire model line is fully refreshed on the new platform system," predicted Karl Brauer, an analyst for Kbb.com. "Don’t expect VW's sales trends in the U.S. to change any time soon."

Within weeks or maybe a few months the automaker is expected to announce a plan to build the Tiguan replacement, either in Chattanooga or in Puebla, Mexico. Assuming that happens, the new model won't reach showrooms for at least two more years.

VW may reach its goal of global sales domination anyway. But the celebration in Wolfsburg will be more joyous if a U.S. turnaround is one of the reasons.

]]>http://fortune.com/2014/07/03/vw-us-sales/feed/0VW Automobile AssemblyfortuneheatherVW’s new Golf is about to land in the U.S.http://fortune.com/2014/05/16/vws-new-golf-is-about-to-land-in-the-u-s/
http://fortune.com/2014/05/16/vws-new-golf-is-about-to-land-in-the-u-s/#commentsFri, 16 May 2014 16:00:00 +0000http://test-alley.fortune.com/?p=406583]]>FORTUNE — There couldn't be a better moment for the arrival of Volkswagen's new Golf.

Volkswagen AG, in its drive toward global sales leadership, has been stumbling in the U.S. due to a delay of expected new models. The automaker’s chief executive officer promised shareholders in Germany on Tuesday that the lapse will be corrected. Two new sport-utility vehicles are on the drawing boards.

Even so, a turnaround for VW in the U.S. could take at least two years. In the meantime, its new Golf GTI hatchback arrives at U.S. dealerships within weeks. The sporty GTI is the first in a wave of new Golfs meant to strengthen VW’s brand image with American consumers; though Golf isn’t a model expected to sell large number, like the Passat family sedan.

But the new Golfs are significant, because they're the first of VW’s MQB-derived models, a common global architecture that eventually will provide the underpinning for half or more of all vehicles sold by the automaker around the world. MQB will be the basis for new models sold by VW's Audi, Skoda and Seat brand — as well as by the VW brand.

By employing a common architecture for so many different models, VW says it can achieve superior economies of scale and lower the cost of production. Lower cost allows VW to add more features and content or to increase profitability.

Improved sales in the U.S. and the rest of the western hemisphere "is a cornerstone of the 2018 strategy” to be global No. 1, Martin Winterkorn, chief executive, said at this week's shareholders meeting. “We want to and we must grow there substantially and profitably.”

In the first quarter of 2014, VW delivered 3.2 million vehicles worldwide, putting it on track to deliver more than 10 million vehicles for the first time in a single year, and four years sooner than previously forecast. The faster-than-expected pace comes from strong results in China, the world’s biggest single automotive market.

In the U.S., VW brand sales were down 10% in the first quarter. U.S. dealers are disappointed because many invested in facilities at VW's urging on the expectation that the company’s new assembly plant in Chattanooga, TN would herald of a wave of new models and growing sales. Prior to Golf, VW introduced a Passat sedan in 2011.

A sport utility (also known as a crossover) for the U.S. based on the MQB and about the size of a Ford Explorer F is under consideration for assembly in Chattanooga or in VW’s plant in Puebla, Mexico. The automaker also is considering a replacement for its current Tiguan crossover that would be more competitive with Toyota RAV4 and Nissan Rogue.

Golf GTI, a "hot" hatchback meant to compete with cars such as the Subaru Impreza WRX and Ford Focus ST, represents the seventh generation of VW's most famous world car. It first showed up in the U.S. in the early 1980s. In its non-sporty incarnation, Golf first came to the U.S. as the VW Rabbit, a name no longer used.

The new GTI will cost between $25,000 and $30,000, depending on how it's equipped and likely will be popular among the younger, mostly male buyers for whom it is intended.

U.S. dealers surely are glad GTIs have arrived - though they'll be much happier when VW's tardy sport utilities are ready.

Don't look for TV advertisements of Volkswagen's XL1 "supercar." The technology-rich model isn't meant for consumers, not even rich Hollywood types who might, in any case, squawk about the noisy ceramic brakes or the unimpressive pickup. The gullwing doors and the claim of 261 miles per gallon of fuel consumed by XL1's plug-in diesel hybrid engine, impressive as they are, wouldn't be sufficient to make believers of Jay Leno or Larry David.

But make no mistake, the rocket ship-like XL1 is a brawny statement by Wolfsburg, Germany-based VW. It's the outgrowth of a pet project started more than a decade ago by Ferdnand Piech, the automaker's chairman, to prove his company could build a vehicle meeting conventional safety standards that can achieve 100 kilometers an a liter of fuel.

The car's triumphal presentation to the world automotive press--and eventually to 250 handpicked German consumers illustrates the 76-year-old Piech's enduring influence over VW's management. Many of the technologies, such as the liberal use of carbon fiber, might make be used for other VWs, helping to make them lighter and more efficient. Piech serves as chairman of VW's supervisory board; Martin Winterkorn, his prot?g?, is CEO.

Looking at the XL1, one can’t help but think of VW's open and transparent push to be No. 1 automaker globally by 2018, in terms of sales. It may not get there, but not because of too little determination from its 35,000 engineers worldwide or too little audacity from its executive suite.

"We might use such an engine on other models," says Ulrich Hackenberg, VW's head of research and development about the 0.8-liter two cylinder power plant. Small, light, efficient city cars like VW's Up! will reinforce the German automaker's sales total. It most likely will tussle for leadership against Toyota TM, an automaker that's learned the hard way that No. 1 status can be a poisoned chalice.

Weighing about 1,750 pounds, the XL1 features nifty high-tech touches, such as closed circuit television whose screens replace the conventional right and left rear-view mirrors. It took a few moments to get used to looking at the screens instead of the mirrors--Hackenberg said the costly technology will get progressively cheaper, allowing VW to use it on other models.

Hackenberg noted that VW is learning from the XL1, how to reduce cycle times for fabricating parts and components from carbon fiber for example. Until now, stamping metal has been much quicker, rendering carbon fiber impractical despite its strength and lightness.

Not meant to be speedy, the XL1 nevertheless can reach 99 miles per hour, thought acceleration to 62 miles per hour is a relatively laid back 12.7 seconds. Regenerative braking returns power to the lithium-ion battery. (The XL1’s design recalls Honda’s HMC early but slow-selling Insight hybrid.)

This is the fourth iteration of a super-efficient car ordered by Piech. VW designed the first version of the narrow two-seater with the passenger sitting behind the driver. This one retains a flavor of the original, the passenger seated to the side and slightly behind the driver, allowing the car’s body to be extra narrow and aerodynamic.

The 250 lucky recipients of XL1 will be surveyed and polled meticulously by VW to learn what they like and don't about the car. Automobile, the enthusiast magazine, says that VW is thinking about using the design for a sports sedan.

However VW uses the knowledge and experience gained from the XL1, the automaker will likely be studied by the rest of the automotive world, just as Toyota was at the end of the last century. Ferdnand Piech wouldn't have it any other way.

The seventh generation Volkswagen Golf hatchback — a car that American baby boomers knew in its early days as the misbegotten Rabbit — goes on sale in Europe in two weeks, a year ahead of its debut in the United States.

VW is hoping American carbuyers will be more receptive to the new Golf, since hatchbacks have had to fight the outmoded stereotype that they're little more than chopped-down gas misers. VW, a carmaker in the midst of a growth spurt in the U.S., is aiming for the new Golf to be a big seller, a respected member of a model lineup anchored by the larger Jetta and Passat.

In the next few months VW also will reveal how and where it will manufacture Golf for North American dealers. The new model is the first to employ VW's modular MQB architecture, developed to underpin a slew of models and vault the carmaker to its goal of No. 1 worldwide in terms of sales, and perhaps in profitability, by 2018.

Will it work? "Younger American buyers today are more open-minded and skewed toward European tastes," says Jesse Toprak, an analyst for the TrueCar automotive buying website. "Back in the 1970s people saw hatchbacks as basic transportation. Cars like the Chevrolet Chevette, Dodge Omni and the Rabbit won't bring back many positive memories," he adds.

VW manufactured the Rabbit at a factory in New Stanton, Pennsylvania between 1978 and 1984. The automaker threw in the towel when sales of that variant lagged, a victim of poor quality and cheap materials. But VW has persevered, making Golf one of the best-selling global models of all time, a rival to Toyota's TM Corolla, through six generations and 38 years of production.

Joe DeMatio, senior editor of Automobile magazine, argues that "your average American still equates hatchbacks with cheap economy cars.” It is, he goes on, really difficult to erase this from the American psyche. “Hatchbacks were something you drove in high school and college until you became an adult and could afford a real car. It’s a shame, because they are so incredibly useful."

In fact, hatchbacks in recent years have accounted for 5% to 7% of the U.S. market, according to Edmunds.com, an automotive website. But the number of hatchback models has been rising to 42 in 2012 from just 27 in 2008. The newcomers include alternative-fuel models such as Chevrolet GM Volt and Nissan NSANY Leaf.

The latest generation Golf, though longer and wider than the model it replaces, is 220 pounds lighter, which factors into a fuel consumption saving of up to 23% when the vehicle is equipped with the 1.4-liter turbo engine, producing 140 horsepower. VW offers several advanced safety usually only available in luxury cars, such as adaptive cruise control. Adaptive cruise control limits speed while also preventing the car from gaining too quickly or colliding with a slower-moving vehicle ahead.

The new model starts in price at 16,975 Euros, the same as the starting price of the model it replaces even though the engine is more powerful in the 2013 model.

If VW can figure out another clever U.S. marketing campaign for the Golf, it could turn into one of the automaker's mainstream brands, perhaps its strongest. Though VW's use of the German word "golf" originally denoted what English speakers know as "gulf," today it's also an elite sport that has grown globally and in terms of prestige, especially among women. Ralph Lauren evidently knew what he was doing when he chose Polo to sell clothing.

As bland as the latter may sound, it has been music to many at Volkswagen, the auto maker that produces PQ35-based vehicles. The Volkswagen Group, which owns brands such as Audi, Bentley and Porsche, leads the industry in profitability and is aggressively striving to become the top car manufacturer in the world in terms of sales. A principal reason for the Wolfsburg, Germany-based firm’s success is the PQ35 and its siblings, highly efficient architectures that underpin a broad range of car models.

So-called common architectures have been a Holy Grail of sorts of car manufacturers for decades. Developing new vehicles can cost billions. The key to recouping such costs is selling a range of cars that — while as drastically different to the eye as a posh Audi from an entry-level VW — share many components and benefit from economies of scale.

That is easier said than done, particularly as auto companies aim to sell vehicles to customers across the globe. General Motors GM a decade ago struggled with scores of vehicle platforms worldwide, a cause of uncontrollable costs and a contributing factor to its eventual bankruptcy in 2008. Today, GM's global Epsilon platform is sold in the U.S. as the Chevrolet Malibu and Buick Regal, the Opel Insignia in Europe, and the Daewoo Altheon in Asia. Toyota's TM MCM architecture, meanwhile, is the basis of its Camry and Prius models, while its MCC is used for the Corolla.

But among the world’s high-volume automotive architectures, the PQ35 accounts for more annual sales than any other. Dr. Ulrich Hackenberg, a member of VW’s board of management and responsible for research and development, is the erstwhile godfather of the PQ35 strategy. The 61-year-old engineer has a long, storied career with VW having had a hand in some of the company’s most imaginative concept vehicles as well as bedrock engineering strategy. Last year, the PQ35 underpinned about 3.5 million of the 8.4 million cars sold worldwide. It was sold as the VW Golf, Audi A3, Skoda Octavia, and Seat Leon for instance.

Now, the company is preparing the PQ35’s successor. VW's new Golf, which goes on sale this fall in Europe and may appear in the U.S. by 2014, is based on the automaker's new architecture, named MQB. MQB also will be used to manufacture smaller VW models. "VW was already at the top of the pile with PQ35," said Tracy Handler, principal analyst for IHS Automotive in Northville, Michigan. "They're building on that expertise. VW has so many brands, and it doesn't go out on a limb chasing" market niches with too few potential sales.”

VW's MQB system establishes fixed points for where the engine is mounted and a fixed distance from the center of the front wheels to the control pedals. The distance VW chose from pedals to front axle allows a very short front overhang, which facilitates sporty styling. "Using these proportions as the base, we can adjust other variables, such as the width of the car," said Rainer Michel, VW's vice president of product marketing and strategy in the U.S. "And since so much of the car is the same we can standardize manufacturing processes around the world, buy tools much cheaper and lower our investment in plants."

Michel said the new architecture will be extended on smaller VW models now in development, including the VW Polo and Skoda Fabia. VW, throughout the 1980s and 1990s, acquired Seat, a Spanish automaker, and Skoda, a Czech automaker. It also owns Bentley, Lamborghini and Bugatti. Another MQB advantage, he said, will be its ability to accommodate a number of new alternative engine options, such as plug-in gas-electric hybrids and battery-powered electrics, in addition to a range of gas and diesel engines.

This kind of flexibility is insurance of sorts for unpredictable factors auto makers must contend with over the span of years. "The increasing requirements of better fuel economy, tougher crash standards, body rigidity and over performance create a hell of cost," said Michel. "And we can't recover those costs through pricing so we have to find ways to economize. Without modular [architecture] we couldn't be profitable."

American car buyers and the motoring press are giving a warm welcome to Volkswagen's new Passat midsize sedan, the German automaker's latest salvo in a campaign to pass General Motors and Toyota to achieve No. 1 sales status worldwide.

November sales of Passat, which was named Motor Trend magazine's Car of the Year following its introduction in September, barely topped 6,000. Though that number is less than half that of the leaders in its segment, it represents an impressive total compared to that of the previous, smaller and more expensive Passat. The increase suggests that VW buyers as well as loyalists of other brands are adding Passat to their shopping lists.

VW sales overall were up 40% for the month in the U.S. Passat was named a finalist in the North American Car of the Year competition, which will be decided at the North American International Auto Show in Detroit on January 9.

Wolfsburg, Germany-based Volkswagen's goal is to lead the world in unit sales of vehicles by 2018, which would require the automaker to increase sales in all major automotive markets. It is currently third in the world; and the top seller in Europe.

But the final numbers may show that VW achieved No. 1 — at least temporarily — in 2011. Toyota last year was hit by quality concerns in the U.S. and the March 11 earthquake/tsunami in Japan. The German automaker’s goal is to have firm grasp on the top spot six years hence, with sales of 10 million vehicles annually, compared in 2011.

"VW's goals are very aggressive," says Michelle Krebs, an analyst for Edmunds.com, an automotive website. "Next year will be competitive in the midsize sedan segment. Ford has a new Fusion, Chevy a new Malibu and Honda HMC a new Accord."

One of VW's weak spots is the U.S., where it holds a slim 3.5% of the market, including its Audi luxury franchise - behind all major Asian automakers and GM, Ford F and Chrysler. But the U.S. also could be the place where VW's potential is the most unrealized.

VW floundered for years in the American market because it failed to convince enough motorists to buy models that were engineered for Europeans. The new Passat, built in a new assembly plant in Chattanooga, Tennessee, represents a fresh approach: designing cars specifically for American tastes while retaining the flavor of German engineering.

"We feel very confident about 2012," says Scott Vazin, a VW spokesman. "Between VW and Audi we should end 2011 with slightly more than 400,000 in sales." The VW Group's goal in the U.S. is to sell 1 million VW and Audis in 2018.

The Chattanooga plant, with capacity to build 150,000 Passats, can be expanded if sales of the sedan grow sufficiently. VW could add another U.S.-built model, a crossover, based on the Passat architecture.

As for Audi, rumors abound that VW is considering a manufacturing site in Chattanooga or elsewhere, mimicking BMW and Mercedes, both of which build vehicles in the U.S.

Audi is the most sought-after car in the U.S., according to Edmunds.com, and its dealer inventory is at a mere 28 days. "The challenge for Audi is more production," says Krebs.

Nearly every automaker in the world states explicitly or implies that it intends to grab a bigger share of the market - though, of course, such an outcome is impossible for all to accomplish. In fact No. 1 status has been nothing but heartache for Toyota TM and GM GM. VW might want to reflect on whether its scorched-earth policy is a wise one.

Midsize sedans play in the the fattest, most important slice of the U.S. automotive market, one where companies fight the hardest to gain share. Thorough May, midsize cars comprised more than a half of all cars sold in the U.S. and more than a quarter of all vehicles sold, including minivans and sport utilities.

Passat has been in the U.S. since 1973, but in a size too small for shoppers of family sedans, The newly-designed Passat has one advantage over the others: an optional diesel engine. None of its peers offer diesel, giving the Passat a distinctive selling point, especially for road warriors looking for fuel efficiency and long lags between fill-ups.

The enlarged Passat, built at a newly-built factory in Chattanooga, Tenn., was designed specifically for American families and to steal customers from the current sedans, consistent with the German automaker's self-proclaimed push to be the world's top seller by 2018.

"We are keeping all the characteristics that will identify Passat with German precision and engineering," said Serban Boldea, product marketing manager. Yet all models will include features like Bluetooth phone connection and dual-zone climate control that American consumers favor.

About three-quarters of all Passats ordered will come equipped with a 2.5-liter, five-cylinder gasoline engine that burns regular unleaded fuel, respectable fuel efficiency of 22 miles per gallon in the city, 31 miles per gallon on the highway. VW's TDI Diesel gets 31 mpg in the city and an impressive 43 mpg on highway. Even with diesel fuel's slight cost premium over regular unleaded, superior efficiency means a comparable operating cost to a gas-electric hybrid.Given VW's 18.5-gallon fuel tank, the largest in the segment, the TDI has a range of 795 miles, permitting a round-trip between Detroit and Chicago on a full tank. The vehicle compares favorably, in terms of cost of fuel per mile traveled, with Toyota's Camry hybrid, Ford's Fusion hybrid and Hyundai's Sonata hybrid - midsize competitors with shorter highway range.VW still has to overcome the prejudice of some American drivers against diesel, which suffers from the outdated impression that they reek, produce sooty smoke and are noisy. Today's diesel complies with exceptionally strict air-quality standards. (VW, it must be said, is responsible for at least some prejudice, owing to its abysmal diesel Rabbit models of bygone years.)

In a daylong drive across Tennessee's rolling countryside the Passat performed admirably, imparting the tight, solid ride and handling for which the German auto industry has grown justifiably renowned. The diesel, with less power and better torque than the 2.5-liter gasoline model, actually handled the hills with more authority than the gas version.

Engineering advances have made diesel engines much quieter than earlier versions, with none of the malodorous emissions that turned off so many drivers. German engineers have a point when they insist that if drivers seek fuel economy, diesel compares well against gas-electric hybrids on the grounds of simplicity and ease of maintenance.

The least expensive gasoline-powered Passat will start at a retail price of under $20,000. The least-expensive TDI Diesel will start at $26,000, rising in price to about $32,000 with frills such as navigation, larger wheels, sunroof and power seating.

VW finally has the car that earns consideration against some of the most popular family sedans on the road, especially those powered by hybrids. And with diesel, VW may get a second-look from consumers determined to squeeze every last mile from their fuel budget.